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Optimal Voucher Privatization Fund Bids When Bidding Affects Firm Performance


  • Barbara G. Katz
  • Joel Owen


Voucher privatization has emerged as a feature of the transition in post-communist economies. While the choice problem facing voucher holders is strikingly similar to the conventional portfolio choice problem, the voucher portfolio problem (VPP) has two important distinguishing characteristics. First, the proportion of ownership that will result from a given voucher bid for the shares of a firm offered for privatization is unknown. This follows since a pre-auction share price is lacking and knowledge of other competing voucher bids is not available. Second, the performance of the privatized firm will depend on the composition of ownership, and, as a consequence of the first characteristic, cannot be known at the time a voucher bid is submitted. In this paper we investigate the VPP when these characteristics prevail and when the bidders have various skills in managing and restructuring firms in which they have acquired ownership shares.

Suggested Citation

  • Barbara G. Katz & Joel Owen, 1995. "Optimal Voucher Privatization Fund Bids When Bidding Affects Firm Performance," Working Papers 95-20, New York University, Leonard N. Stern School of Business, Department of Economics.
  • Handle: RePEc:ste:nystbu:95-20

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    References listed on IDEAS

    1. Barbara G. Katz & Joel Owen, 1993. "Designing an Optimal Privatization Plan for Restructuring Firms and Industries in Transition," Working Papers 93-24, New York University, Leonard N. Stern School of Business, Department of Economics.
    2. Philippe Aghion & Olivier J. Blanchard, 1994. "On the Speed of Transition in Central Europe," NBER Chapters,in: NBER Macroeconomics Annual 1994, Volume 9, pages 283-330 National Bureau of Economic Research, Inc.
    3. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W., 1997. "Privatizing Russia," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522284, July.
    4. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W., 1994. "Voucher privatization," Journal of Financial Economics, Elsevier, vol. 35(2), pages 249-266, April.
    5. Philippe Aghion & Olivier Jean Blanchard, 1994. "On the Speed of Transition Central Europe," NBER Working Papers 4736, National Bureau of Economic Research, Inc.
    6. repec:hrv:faseco:30704159 is not listed on IDEAS
    7. repec:hrv:faseco:30724330 is not listed on IDEAS
    8. Roland, Gerard & Verdier, Thierry, 1994. "Privatization in Eastern Europe : Irreversibility and critical mass effects," Journal of Public Economics, Elsevier, vol. 54(2), pages 161-183, June.
    9. Laban, Raul & Wolf, Holger C, 1993. "Large-Scale Privatization in Transition Economies," American Economic Review, American Economic Association, vol. 83(5), pages 1199-1210, December.
    10. Katz Barbara G. & Owen Joel, 1993. "Privatization: Choosing the Optimal Time Path," Journal of Comparative Economics, Elsevier, vol. 17(4), pages 715-736, December.
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    Cited by:

    1. Elena Yusupova, 2006. "Information Asymmetry, Share Mispricing and the Coordination Problem: Investor Portfolio Choice in Czech Voucher Privatization," CERGE-EI Working Papers wp301, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    2. Walsh, Patrick Paul & Whelan, Ciara, 2001. "Firm performance and the political economy of corporate governance: survey evidence for Bulgaria, Hungary, Slovakia and Slovenia," Economic Systems, Elsevier, vol. 25(2), pages 85-112, June.
    3. Marko Pahor & Janez Prasnikar & Anuska Ferligoj, 2004. "Building a corporate network in a transition economy: the case of Slovenia," Post-Communist Economies, Taylor & Francis Journals, vol. 16(3), pages 307-331.

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